Players moving into the space with Govt/PE funding.
Mumbai: India’s fast-growing affordable housing sector is seeing a startup boom with a new breed of entrepreneurs making their debut with innovative business models.
Several players are coming into the space with funding from government agencies, private equity and corporates to cash on the opportunity.
In the recent Budget announcement, the government has increased the deduction of interest on home loan by Rs 1.5 lakh to Rs 3.5 lakh to boost demand for affordable housing.
Already, the GST rate is only 1 per cent for under-construction flats in the affordable housing category and the Centre provides interest subsidy to home buyers through a scheme.
For instance, the floods that rattled Chennai in 2016 inspired Sriram Ravichan-dran to launch Modulus Housing that offered innovative housing solutions.
“The Chennai floods of 2016 when large sections of the population lost their homes was a period of reckoning for us. We came up with the collapsible shelter solution which can be set up in two days,” said Ravi-chandran, Founder & CEO, Modulus Housing.
Similarly, Laxman Shan-kar launched Kaushal Bhaav Skill Solutions (KBSS) to focus on zero carbon homes. KBSS, which raised Rs 1.97 crore from the Rajasthan Skills and Livelihood Development Corporation, and Rs 73 lakh from Tata Trusts, is expected to deliver 200 houses in Rajasthan.
“A skill gap exists in traditional building practices. We have come up with comprehensive competitive products like zero carbon homes,” said Laxman Shan-kar, Founder & Managing Director, KBSS.
Aditya Shukla, CEO and Co-Founder of Saltech Solu-tions, got to witness the waste fills and dumpsites in Ahmedabad that had been piling for years while working as an intern for a startup. “We got down to figure out how to utilise the discarded material in a productive manner and create a business out of it. There are several technologies thro-ugh which plastics can be used in building material and as fillers in concrete,” said Shukla.
The startups benefitted from a boot camp that included workshops, business exercises and laboratories, and mentorship from sector experts that helped them develop their solutions and products to better add-ress the market challenges in affordable housing segments.
The ShelterTech Acceler-ator is developed by non-profit Habitat for Humanity in collaboration with the IIM–Ahmedabad's Centre for Innovation, Incubation and Entrepreneurship. Aside from providing acceleration and business support to participating startups, the programme also connected the startups to various network support and funding opportunities from government agencies, potential customers, suppliers and investors.
“Startups will drive the next wave of innovation in the affordable housing sector. Eight companies including KBSS, Mobius, Saltech, industrial 3D printing company Tvasta showcased their innovations at the recently concluded ShelterTech Accelerator programme in New Delhi. This programme--the first affordable housing accelerator in India-- aimed at identifying and backing startups with a potential to offer innovative solutions to the challenges faced by the affordable housing sector,” said Rajan Samuel, Manag-ing Director, Habitat for Humanity India.
"Only a paltry number of developers have built housing that meets the government's criteria for incentivised affordable housing in 2019,"Anarock Chairman Anuj Puri said.
Of the total housing supply of 1,39,490 units in the top seven cities H1 2019, merely 39,840 units meet these criteria.
"The government's recent budget ‘bonanza' of an additional Rs 1.5 lakh tax deduction on interest repayment of home loans availed till March 2020 will benefit very few people in urban India," Puri said.